Regulators are here to prompt innovation

FCA, for instance, is placing a limit on investments in P2P (peer-to-peer) agreements for retail customers new to the sector of 10 per cent of invest-able assets. This is an important means of ensuring that retail customers do not over-expose themselves to risk. The investment restriction will not apply to new retail customers who have received regulated financial advice.

In addition, P2P platforms should have the following:

  • More explicit requirements to clarify what governance arrangements, systems and controls platforms need to have in place to support the outcomes they advertise, with a particular focus on credit risk assessment, risk management and fair valuation practices.
  • Strengthening rules on plans for the wind-down of P2P platforms if they fail.
  • Introducing a requirement that platforms assess investors’ knowledge and experience of P2P investments where no advice has been given to them.
  • Setting out the minimum information that P2P platforms need to provide to investors.
  • Applying the Mortgage and Home Finance Conduct of Business sourcebook and other Handbook requirements to P2P platforms that offer home finance products, where at least one of the investors is not an authorised home finance provider.

On the other side of the ocean, the SEC’s Strategic Hub for Innovation and Financial Technology, plays an important role in facilitating the SEC’s active engagement with innovators, developers, and entrepreneurs.

As part of a continuing effort to assist those seeking to comply with the U.S. federal securities laws, FinHub published a framework for analyzing whether a digital asset is a security. The framework is not intended to be an exhaustive overview of the law; rather, it is a tool to help market participants assess whether the federal securities laws apply to the offer, sale, or resale of a particular digital asset. Additionally, the Division of Corporation Finance issued no-action response to a market participant in connection with the proposed offer and sale of a digital asset.

In case your intentions are good, regulators are open for business. Moreover, a productive government is a great deal.

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